China and Hong Kong’s Bilateral Trade and Investment Outlook with Qatar

Because the FIFA 2022 World Cup kicks off in Qatar, we talk about the nation’s bilateral commerce and funding relations with China and Hong Kong. China has been closely concerned in Qatar’s infrastructure growth, together with constructing the Lusail Stadium for the 2022 World Cup. Moreover Qatar’s assist for the Belt and Highway tasks, mainland China’s free commerce negotiations with the GCC grouping (of which Qatar is a member) took a optimistic flip in 2022. Beijing can also be in search of nearer cooperation in strategic fields like distant medical care, on-line studying, 5G, and large information.

China and Qatar have an vital strategic relationship that goes again over 4 many years. The previous 10 years has seen a rise in Chinese language funding into the Arab Gulf states, which play an vital function within the Belt and Highway Initiative (BRI). The Gulf nations have gotten more and more shut commerce and funding companions with China.

Qatar, as one of many richest and most well-developed nations within the area, is a key participant within the growth of regional cooperation with China and has been actively selling collaboration with each mainland China and Hong Kong to boost enterprise and funding alternatives.

Because the FIFA 2022 World Cup kicks off in Qatar, we take a look at China’s commerce and funding relations with the Gulf nation, which embody investments within the World Cup infrastructure.

Mainland China-Qatar relations

Mainland China and Qatar first established diplomatic relations in 1988. The 2 nations have developed robust bilateral relations within the many years since and at this time, China is one in all Qatar’s largest buying and selling companions, whereas Qatar is one in all China’s main sources for petroleum imports.

Over the previous 10 years, China and Qatar have quickly solidified bilateral relations. China has continued to extend funding in Qatar, with important stakes in a number of main Qatari tasks, together with high-profile tasks such because the Lusail Stadium for the 2022 FIFA World Cup. Bilateral commerce has additionally continued to see robust progress, reaching a brand new excessive in 2021.

China has made efforts to extend funding and cooperation with members of the Gulf Cooperation Council (GCC), of which Qatar is a member. A doable China-GCC free commerce settlement (FTA) has undergone a number of rounds of negotiation and have reportedly not too long ago seen new breakthroughs.

Hong Kong-Qatar relations

China’s Particular Administrative Area of Hong Kong has individually developed relations with Qatar since sovereignty of the town was returned to China after British rule in 1997. In 2013, Qatar and Hong Kong signed a double taxation avoidance (DTA) treaty to boost protections for buyers and enhance enterprise trade between the 2 areas. Bilateral relations have continued to develop with the institution of a Qatari Common Consulate in Hong Kong in 2014.

In 2019, Make investments Hong Kong (InvestHK) and the Qatar Monetary Centre Authority signed a Memorandum of Understanding (MoU) to advertise bilateral funding. In the meantime, the Qatar Chamber has additionally held occasions in Hong Kong to discover enterprise alternatives and develop cooperation and bilateral funding as not too long ago as October 2022.

Mainland China-Qatar bilateral commerce

Since 2018, China has overtaken the US to turn into Qatar’s prime provider of services, whereas Qatar’s exports to China elevated by greater than 60 % year-on-year. In 2021, the bilateral commerce quantity between Qatar and China reached US$17 billion, a 57 % progress over the earlier 12 months. Within the first three quarters of 2022, China exported US$3.0 billion and imported US$16.49 billion from Qatar, leading to a detrimental commerce stability of US$13.49 billion.

The majority of Qatar’s exports to China are main sources, which make up 4 of the highest 5 export merchandise. Exports of mineral fuels and oils amounted to US$11.7 billion in 2021.

In the meantime, China’s prime exports to Qatar are equipment, mechanical home equipment, and nuclear reactors, which amounted to US$553.6 million in 2021.

Hong Kong-Qatar bilateral commerce

Because the twentieth century, Qatar has been a major buying and selling associate for Hong Kong within the Center East. Over the previous 25 years, the exports of Hong Kong to Qatar have elevated at an annual charge of 15.8 %, from US$15.5 million in 1995 to US$603 million in 2020.

In 2020, Hong Kong exported US$603 million value of products to Qatar. The three largest exports have been gasoline generators (US$470 million), non-knit males’s coats (US$39.2 million), and gold (US$22.3 million).

Over the identical interval, Hong Kong’s main imports from Qatar have been refined petroleum (US$247 million), gasoline generators (US$167 million), and jewellery (US$135 million).

Mainland China’s funding in Qatar

China is closely concerned in Qatar’s infrastructure growth, contributing considerably to the event of the Hamad Port in Doha, the Lusail Stadium for the 2022 FIFA World Cup, and different infrastructure tasks throughout the nation.

In 2020, China accomplished a complete of US$423.44 million value of tasks in Qatar, following a pattern of slight decline in funding quantity, which had seen its peak in 2017 totaling US$1.03 billion.

Improvement of the Hamad Port

In 2018 the China Harbouring Engineering Firm (CHEC), and QTerminals, the corporate accountable for operating Qatar’s Hamad Port, co-signed an MoU geared toward benefiting each nations’ regional financial actions, together with China’s BRI and Qatar’s Nationwide Imaginative and prescient 2030. The MoU includes Part 2 of the growth of the Hamad Port, which is Qatar’s nationwide port and thus a pivotal infrastructure for the nation’s growth and commerce.

CHEC is a prime supplier of providers in engineering-procurement-construction (EPC), build-operate-transfer (BOT), and public-private-partnership (PPP), with each the private and non-private sectors. The corporate is concerned in a number of tasks throughout all infrastructure fields, equivalent to marine engineering, roads and bridges constructions, municipal works, environmental and hydraulic engineering, amongst many others.

The 2022 FIFA World Cup Lusail Stadium

In 2016, China Railway Development Corp received a contract value US$764 million to assemble a stadium for Qatar’s internet hosting of the FIFA World Cup Qatar 2022™ (2022 World Cup). The Lusail stadium, which is the official location of the opening and championship video games of the 2022 World Cup, is the product of a three way partnership between the Chinese language state-owned enterprise (SOE) and the Qatari builder HBK Contracting.

Located within the seaside metropolis of Lusail, a deliberate metropolis north of Doha, the nationwide stadium has turn into one of many metropolis’s spotlights. With 45,000 sq. meters of membrane, the 92,000-seat facility is the most important membrane-structure constructing on this planet.

Qatar’s funding in China

Comparatively talking, Qatar’s funding in China is comparatively small. After collaborating in a US$2.8 billion cornerstone funding within the 2010 preliminary public providing of the Agricultural Financial institution of China, in 2014, Qatar’s sovereign wealth fund introduced a US$10 billion funding enterprise with China’s Citic Group to increase within the Chinese language actual property and infrastructure markets, and arrange a US$10 billion fund to put money into China’s healthcare, infrastructure, and actual property sectors.

The function of Qatar in China’s Belt and Highway Initiative

The Gulf nations’ place on China’s BRI has usually been centered on regional companions, constructing tasks, and vitality, along with being important nexus areas for commerce in rising nations. Qatar was among the many first nations to assist China’s BRI imaginative and prescient. In 2019, following a go to of Sheikh Tamim bin Hamad Al Thani  to China, Qatar signed a number of extra agreements with Beijing to boost its participation within the already quite a few tasks alongside the BRI.

Hong Kong-Qatar funding

With a purpose to additional their mutual cooperation on exchanges and assist for funding promotion, InvestHK and the Qatar Monetary Centre Authority signed a MoU in 2019, including to the 2013 Complete Double Taxation Settlement between the 2 jurisdictions.

In October 2014, Qatar’s sovereign wealth fund invested HK$4.78 billion (US$616 million) in a 19.9 % stake in Sogo division retailer operator Way of life Worldwide Holdings, as its third luxurious division retailer funding in 4 years.

Different engagements between China and Qatar

Monetary cooperation

In an effort to spice up commerce and funding between China and the economies of the Gulf Arab states, in 2015, Qatar inaugurated the primary clearing home for Chinese language yuan transactions within the Center East. Industrial and Industrial Financial institution of China’s (ICBC) Doha department acts because the clearing financial institution for the middle. The particular function of the clearing financial institution is to handle each facet of a foreign money transaction – slicing the buying and selling prices and time in half.

By fostering already-existing ties with China, Qatar can achieve from the Chinese language yuan’s internationalization as effectively. Doha is benefiting from the plan and rising as a regional and world monetary hub. As Qatar’s commerce with China continues to develop, the nation is making an attempt to diversify a few of its substantial overseas reserve holdings away from US {dollars}. Buyers in Qatar and the Gulf even have entry to new monetary merchandise with the Chinese language yuan because the unit of foreign money of trade.

Vitality

Qatar offers greater than 20 % of China’s wants for pure gasoline, making it the second-largest provider to the nation. Qatar Petroleum, the Qatari state-owned oil and gasoline enterprise, has joint ventures with a number of Chinese language corporations in oil exploration, manufacturing, and refining tasks in each China and Qatar.

In Might 2021, Qatar Vitality (then Qatar Petroleum) signed a 10-year settlement with China’s Sinopec to offer two million tons of liquified pure gasoline (LNG) per 12 months. In November 2022, Qatar Vitality then inked a second LNG settlement (the corporate’s longest to this point) to offer LNG to Sinopec in China over a 27-year interval, because the uncertainty of unstable markets worldwide pushed purchasers to hunt out long-term contracts.

Safety

Safety is an more and more vital dimension of the China-Qatar relationship. On the Worldwide Prison Police Group (INTERPOL) summit held in Beijing in September 2017, Chinese language Minister of Public Safety on the time, Guo Shengkun, and Qatari Main Common Saad Bin Jassim Al Khulaifi met to debate counterterrorism cooperation. Following the summit, each nations signed a pact that formalized cooperation between Doha and Beijing within the battle in opposition to terrorism within the Center East and the Asia-Pacific space in addition to strengthened coordination between Qatar and China.

Qatar can also be changing into a worthwhile marketplace for the switch of Chinese language army applied sciences. Beijing’s robust participation within the 2014 Doha Worldwide Maritime Protection Exhibition noticed Qatar buy weapons valued at US$23.89 billion from numerous protection companions.

Main commerce and funding agreements

Mainland China-Qatar

Bilateral funding treaty

China has an lively bilateral funding treaty (BIT) with Qatar, which took impact in 2000. The BIT ensures remedy to buyers from the opposite contracting nation that is the same as that afforded to buyers in their very own nation. It additionally features a most-favored-nation (MFN) clause, which requires the contracting events to increase the identical remedy to the opposite contracting social gathering as they do to all different commerce companions.

Beneath the China-Qatar BIT, “investments” which might be protected embody (however aren’t restricted to):

• Movable, immovable property and different property rights equivalent to mortgages and pledges;
• Shares, inventory and every other form of participation in corporations;
• Claims to cash or to every other efficiency having an financial worth;
• Copyrights, industrial property rights, know-how and technological course of; and
• Concessions conferred by legislation, together with concessions to seek for or exploit pure sources.

In the meantime, the buyers which might be protected underneath the BIT embody:

• Chinese language and Qatari nationals;
• Financial entities established in accordance with the legal guidelines of the PRC and domiciled within the territory of the PRC;
• Authorized individuals, together with corporations, normal firms, public organizations, public and semi-public entities constituted in accordance with Qatari legal guidelines and domiciled within the territory of Qatar; and
• The Authorities of the State of Qatar.

The BIT contains clauses on compensation for damages and loss, and dispute mechanisms, together with impartial arbitration in a world courtroom. As well as, the BIT ensures buyers of each nations the correct to switch their investments again to their house nation. It additionally prohibits each contracting nations from expropriating or nationalizing the belongings of a overseas firm inside its jurisdiction, aside from when there are extenuating home wants to take action and it’s achieved in opposition to truthful compensation.

For extra data on how buyers can profit from China’s BITs, see our article right here.

Double taxation settlement

China and Qatar entered right into a double taxation settlement (DTA) in 2008. The Chinese language taxes lined by the DTA are:

• Particular person earnings tax (IIT)
• The earnings tax on enterprises with overseas funding and overseas enterprise

In the meantime, the Qatari taxes lined by the DTA are taxes on earnings. There isn’t any particular person earnings tax (IIT) levied in Qatar for both native residents or foreigners, however overseas corporations are typically required to pay a ten % company earnings tax (CIT) charge on earnings derived in Qatar.

Beneath the DTA, enterprise income are solely taxable within the nation through which the corporate has a “everlasting institution”, except it’s concurrently resident and finishing up enterprise within the different social gathering’s territory. If the corporate is established and carries out enterprise in each nations, the income derived in every nation are taxable by the respective nation. Firms thus aren’t required to pay income tax in each nations.

The DTA states that “everlasting institution” contains corporations which have:

• A spot of administration;
• A department;
• An workplace;
• A manufacturing unit;
• A workshop;
• A farm or orchard;
• A mine, oil or gasoline effectively, quarry, or every other place of exploration, extraction, or exploitation of pure sources; or
• A constructing website, development, and meeting, or an set up undertaking or supervisory actions in connection therewith, however solely the place such website, undertaking or actions proceed for a interval of greater than 9 months.

Earnings derived from worldwide delivery are solely taxable within the nation through which the pinnacle workplace of the corporate is positioned. If the place of the pinnacle workplace is aboard a ship, then the nation is deemed to be the one through which the ship’s house harbor is.

See our China nation portal for an outline of Chinese language taxes and rules on residence and incorporation.

China-GCC free commerce settlement

China has been in long-running negotiations on a possible free commerce settlement (FTA) with the Gulf Cooperation Council (GCC), which has the six Arab Gulf states as its members – Saudi Arabia, Bahrain, Kuwait, UAE, Qatar, and Oman.

Negotiations have been floor to a halt after 9 rounds of talks resulting from a sequence of diplomatic headwinds. Nevertheless, following a go to by GCC representatives to Wuxi, Jiangsu province in January 2022, China and the GCC pledged they might conclude negotiations on the FTA, with no particular timeline given. Earlier negotiations have centered on energy-related merchandise, although not solely. Different merchandise, notably these associated to agriculture, fruits, spices, constructing supplies, and lastly, commerce in providers, are being considered.

Hong Kong-Qatar

Double taxation settlement

Hong Kong has an lively DTA with Qatar, which went into impact in 2013. The Hong Kong taxes lined within the DTA are:

• Earnings tax;
• Salaries tax; and
• Property tax.

In the meantime, the Qatari taxes lined by the DTA are taxes on earnings. Enterprise income are topic to the identical circumstances as within the China-Qatar DTA, that means they’re solely taxable within the nation through which the corporate has a “everlasting institution”, and income derived in every nation is just taxable by the respective nation.

As well as, income derived from worldwide delivery or aircrafts are solely taxable within the firm’s or particular person’s house nation. Meaning if a Hong Kong resident derives income from worldwide delivery, these income won’t be taxable in Qatar, and vice versa.

The DTA states that “everlasting institution” contains corporations which have:

• A spot of administration;
• A department;
• An workplace;
• A manufacturing unit;
• A workshop;
• A gross sales outlet; or
• A farm or plantation, or a mine, oil or gasoline effectively, quarry, or every other place of exploration, extraction, or exploitation of pure sources.

For data on Hong Kong’s tax regime and residence, see our regional portal right here.

Memorandum of Understanding

In 2019, InvestHK and the Qatar Monetary Centre Authority signed an MoU to advertise funding cooperation. The MoU seeks to draw extra direct funding from one another’s jurisdictions and create extra enterprise alternatives.

In response to InvestHK, Hong Kong and Qatar “will share data and experiences in funding promotion, encourage native corporations to arrange or increase their enterprise inside the space of the opposite jurisdictions, and assist one another’s funding promotion occasions that foster bilateral funding between the 2 jurisdictions.”

WTO agreements

China, Hong Kong, and Qatar are all WTO members, which by extension makes all of them social gathering to a spread of multilateral agreements on commerce and funding. These treaties embody:

• The Settlement on Commerce-Associated Elements of Mental Property Rights (TRIPS), which requires WTO members to increase mental property (IP) rights to the IP house owners in any member state or area. It features a most-favored-nation (MFN) clause, guaranteeing equal remedy for IP rights safety for all member nations and areas, and presents dispute decision and compensation mechanisms.
• Settlement on Commerce-Associated Funding Measures (TRIMs), which prohibits members from implementing funding measures which have the impact of limiting commerce with different members, equivalent to native content material necessities (necessities for a corporation to make use of locally-produced items or native providers so as to function out there).
• Common Settlement on Commerce in Providers (GATS), which ensures MFN standing to service suppliers of any WTO member (besides governmental providers equivalent to social safety schemes, public well being, training, and providers associated to air transport).

Future outlook

Relations between Qatar and China are presently at an all-time excessive, and the 2 nations strategically cooperate in key sectors, equivalent to vitality, safety, and funding in infrastructure and healthcare.  China is trying to collaborate intently with Qatar to advance connectivity, constructing a “quick observe” for individuals exchanges, and a “inexperienced channel” for bilateral commerce to create a secure basis for the financial growth of each nations. Particularly, the Chinese language authorities anticipates bilateral tasks to obtain further momentum as Beijing seeks nearer cooperation in strategic fields, equivalent to distant medical care, on-line studying, 5G, and large information.